Hi guys,
How to depreciate my currency? I have tried higher money growth as well as lower interest rates, in my opinion two very, very useful tools to manage the exchange rate but nothing happened so far and export slowdown is a serious drag on growth.
How to tackle this issue?
Best,
grachtel
I have tried higher money growth as well as lower interest rates, in my opinion two very, very useful tools to manage the exchange rate
Indeed!
but nothing happened so far
Rough rule of thumb: the inflation should be higher then the real economy growth, in order to achieve a decreasing exchange rate. But is that really what you want?
and export slowdown is a serious drag on growth.
Take a look at Germany. The real one 
Rough rule of thumb: the inflation should be higher then the real economy growth, in order to achieve a decreasing exchange rate. But is that really what you want?
I doubt that. Standard theory would predict that my currency should depreciate if my returns are less than elsewhere. My real interest rate should be lower than in the standard state, making investment into my currency less likely. Hence, my currency should depreciate, accelerated by the large trade deficit, where currency flows out at an ever increasing rate.
I know that real germany is doing fine although the euro is rising, but my exports are shrinking, my imports are growing and I just dont want that to be I want to get my currency down from 1,09 but I just cannot do it apparently.
Standard theory... Here in Ars Regendi are about ten determinants of the exchange rate, trade deficit is one of them. None of them are the values of the average state. It would have been too complicated to compute such dependencies.
So how can I force a depreciation? Lower interest rates and higher money growth did not work, in fact it appreciated over time.
You did not make that sufficiently.
The World